Posted on 03 Nov, 2016 by Neil Sharp
When internal departments work together amazing things can happen. Your design team sketches out innovative new products. Your marketing department creates remarkable content and campaigns around them. Your sales team hones their pitches to perfection and pre-orders start to flow in. Your purchasing team works tirelessly to create a supporting material supply chain.
Now all you need is your manufacturing team to build and test the products before logistics ship them out.
Unfortunately, this is where the headache can begin for many original equipment manufacturers (OEMs). If your manufacturing facility is the weakest link in your chain, all of the hard work put in beforehand will have been wasted.
In this blog post we take a look at three signs your manufacturing facility could be dragging the rest of your company down. And we consider how outsourcing to an electronics manufacturing services (EMS) provider can help.
Sign 1 – Your efficiency statistics are on the decline
Have you noticed a steady drop in your operational efficiency statistics? Are there specific problem areas that need addressing (assembly, test, logistics), or are you seeing poor performance across the board? Unfortunately, maintaining efficiency levels is a constant juggling act for electronics manufacturers. It's a volatile area and one which can be affected by:
- Material issues – if raw material does not get delivered to the right place, at the right time, in the right quantity or format, your production efficiency statistics will suffer. Failure to manage extended supply chains and "problem" parts is one of the most common reasons efficiency levels drop within electronics manufacturing.
- Poor planning – if your planning team struggle to balance the resources they have - for example, moving operators from one job to another - efficiency levels will also decline. Of course, if the sales team ignore the lead-times your production department set in order to secure new orders they will always be on the back foot. It's vital, therefore, that both sales and manufacturing have clear visibility of customer demand and are then realistic when it comes to setting delivery expectations.
- Insufficient resource – maybe you are running the production line too "lean"? This might work ok the majority of the time but cause you problems when demand spikes; resulting in paying overtime or having to try and hire (expensive) agency staff. Perhaps high levels of sickness have started to impact the "pool" of resource you have available. How would you rate staff engagement and morale at the moment?
- Tired equipment – investment in the latest surface mount technology (SMT) equipment is a necessary evil for electronics manufacturers at the top of their game. For some OEMs, however, this is an area they would rather try and side step for as long as possible. Unfortunately, there comes a time where it is not viable to continue to fix or upgrade tired SMT machines on a regular basis. Each time the machines fail to operate as expected your efficiency statistics fall through the floor and your customers feel the pain. Are you guilty of "sweating your assets" a little too hard? Or perhaps you are struggling to convince the financial director to make that crucial capital investment decision?
Sign 2 – Your delivery performance seems to be getting worse
One of the most visual metrics that something is going wrong within your manufacturing facility relates to on-time, in-full, delivery performance. However, like all statistics, this can be calculated and measured in a variety of different ways. So you need to be open, honest and above all realistic with any information you report. For example, each internal team responsible for assembly and test could have their own key performance indicators (KPIs) when it comes to delivery. The SMT team might be flying through their workload, highly efficient and consistently delivering "early" to the through hole section or test team. This sounds great; unless, of course, a pile of half-finished printed circuit board assemblies (PCBAs) are building up on the other side of the factory due to resource issues.
In general, as product consumers ourselves, our delivery expectations are regularly met and in many cases now exceeded. We probably have Amazon to thank/blame for this. Free next day shipments are becoming increasingly common and, in some cases, we expect goods to arrive several hours after we hit the checkout icon on our smartphone or tablet. Unfortunately, customers ordering complex industrial electronic items are beginning to have similar delivery expectations. If you struggle to offer this level of service, or fail to keep your promises, don't be surprised if they start to look elsewhere.
Sign 3 – The number of customer complaints has increased
One of the most frustrating (and arguably reputation-damaging) scenarios for an OEM, assuming they achieved the customer's delivery date in the first place, is having a problem reported soon after the goods have shipped.
Customer complaints and return requests can be a result of many things including:
- Physical damage – the courier may have handled your product incorrectly or the existing packaging solution you have in place might not be robust enough.
- Wrong quantity – shipping too many units can be frustrating and an accounting headache but something you can usually resolve quite quickly with the customer without a great deal of pain. Supplying too few products to a customer with live demand will, however, have you reaching for the aspirin.
- Wrong configuration – often relating to an incorrect software version loaded prior to shipment, these problems generally rear their ugly head when the customer tries to use the product for the first time. This issue can be particularly painful for the user if the product you design and sell forms part of a much larger project or system. Hardware configuration issues can be equally frustrating. Receiving the wrong power pack, an incorrect language manual or a fixing kit for a different style of product are all likely to result in customer complaints.
- Poor quality – PCBA defects like solder shorts or lifted component legs, cosmetic issues relating to scratched metalwork or units fitted with parts at the end of their tolerances, which then clash, could all trigger a customer complaint. How much resource are you dedicating internally to resolving these type of issues before your product is packaged and shipped out for delivery?
- Lack of customer service – sometimes mistakes within the manufacturing process happen. However, providing you initiate a detailed investigation, develop a robust plan to recover the situation, and provide regular progress updates against the original plan, these issues can quite often be managed along with the customers’ expectations. So how well do you think your own manufacturing team performs in this area? For example, are all customer complaints recorded on a central database so that trends can be analysed? Does each one end up as a finger-pointing session with departments reluctant to take ownership? Or do you have the systems, procedures and, more importantly, the culture in place to manage these issues efficiently with a clear focus on continuous improvement?
If you can relate to one or more of these signs perhaps continuing to build and test your own products in-house should be reviewed? Is this function doing your business more harm than good? You already know that designing, marketing and selling innovative new products is what your team does really well. Is it better to refocus your efforts and resources on these core areas - the ones that really add value to the end customer?
Outsourcing "non-core" activities to an EMS provider, like material procurement, assembly, test and outbound logistics may seem like a daunting task to begin with. But when it is done correctly it can help strengthen your core offering, allowing you to move forward and achieve your growth objectives.
If you would like support in finding suitable EMS providers to meet your company needs, the eBook below maybe of use.
Image by amontei